Is your senior management asking for value beyond savings?
Procurement is increasingly being challenged to provide value beyond savings. Traditionally, procurement focused on bringing more spend under management and driving savings – both of which are easy metrics to measure.
I believe that in the near future, procurement will regularly see meetings with senior leadership that don’t address savings. The ability to show the positive impact of procurement on the business will call for the rise of a new kind of leader.
Procurement can no longer rely on adding headcount to accomplish their goals. With new technologies, we have an opportunity to increase the scale and productivity of procurement teams.
Here are a few suggestions for how procurement can prepare to excel under new, value-oriented metrics:
1. Investigate new and intuitive technologies to speed up processes and automate tactical responsibilities. There is a new wave of procurement platforms available that can bring best in class functionality without a heavy investment or a lengthy implementation time. Imagine going from supplier identification to contract in minutes… This is not futuristic thinking; it is possible today and can accelerate the process of bringing spend under management. In addition, it reduces the overhead associated with gaining access to a large number of innovative small and diversity suppliers.
2. Scale your efforts by making information directly available to your team and internal stakeholders. Controlling information doesn’t work and doesn’t allow procurement to be scalable. Allowing your internal stakeholders direct access to internal and external data will enable them to initiate the supplier discovery process with valuable information provided by procurement. It will also empower procurement to function as internal experts and collaborate to build good partnerships.
3. Train your internal stakeholders to be better procurement managers. Truth be told, this is not my idea. I met the head of procurement from a Biotech company last week that is looking to train employees on strategic sourcing and procurement. Giving them the tools to make better decisions will help them understand procurement processes. Once they see the value in leveraging existing partnerships and improve their negotiating skills everyone will be working together towards a positive impact on overall spend. This is brilliant and a complete shift in existing paradigms.
4. Embrace supplier innovation as a company and leverage them as a powerful source of new ideas. I constantly hear about procurement’s struggle to quantify supplier-enabled innovation. While procurement tends to be somewhat risk averse, bringing in new innovative suppliers may be accompanied by increased risk. Set up clear guidelines on what innovation means for your company and allow for failure. This is a powerful way to encourage new ideas and introduce new suppliers that will make an impact on all areas of the business. Procurement teams have an unbelievable opportunity to find supplier ‘gems’ and bring innovation to their company.
5. Pursue diversity with purpose. Tools like tealbook are game changers for the diversity supplier community. Allowing procurement to instantly consider top diversity suppliers at the exact moment a need for products and services has been identified increases diversity spend and demonstrates a genuine desire to include diversity suppliers in the evaluation process for every opportunity.
There is still a long way to go, but this is an incredible time to be in procurement. Make yourself and your company more competitive by challenging the status quo and embracing change. You will be able to get a comfortable seat at the table and attract a new generation of procurement professionals that are ready add to the positive change already underway.
To learn more how tealbook can help you bring value beyond savings and turn you into a strategic leader, visit www.tealbook.com.